Value in New Zealand? | Value Investing News

Value in New Zealand?

I heard this fund manager on bloomberg or CNBC said he was finding growth companies at really low pe's in New Zealand even after this run-up. I could only find one etf of mostly Australian, 1 NZ company. the etf had a pe of about 6 and dividend yield of 7 or 8.
This dilema i have of finding companies only through etfs is for pretty much every country because there is no coverage in the US on major sites that i know of. you cant screen india,new zealand stocks. Does anyone know a better method of getting acquainted with foreign stocks, especially in New Zealand?

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Hmm took me awhile to find this forum..but anyways I'd also like to know of a method too. I'm thinking of investing in foreign stocks, but i don't know where to start.

You're probably not going to like this answer – but, I am being serious here. If you're up for it, simply start with the country's major exchange. That's what I do whenever I get interested in a small (they all seem that way compared to the U.S.) country's stocks.

You have to hunt around on most stock exchange websites just to find the listed issues. But, once you do you can usually either find a link to company information right there – or once you have a company name you can manually search for the company's own website which will usually have financial data available.

That sounds like a lot of work – and it is. But, these are very small markets compared to the U.S. where you would be looking at something like 10,000+ public companies. So, it's easier to work your way through some of these smaller countries and get to know their public companies. I literally just start with the A's and work my way through the alphabet. I try to do this with all the developed English speaking countries.

But, assuming you can't devote your whole life to reading financials, I suggest you start by sampling all the developed English speaking countries for a few months and then pick the one you feel the most comfortable with given the culture, economy, political situation, etc. and current valuations – at least in that they shouldn't be ridiculously high right now or you'll have trouble finding bargains.

Here's a list of some exchange websites for developed English speaking countries:

New Zealand: http://www.nzx.com/nzxmarket/nzsx/sx_market_list

Bermuda: http://www.bsx.com/Comp-DomListingsMain.asp

Ireland: http://www.ise.ie/app/equityList.asp?type=SEDOL

Australia: http://www.asx.com.au/asx/research/CompanyListed.jsp

U.K.: http://www.londonstockexchange.com/en-gb/pricesnews/prices/Trigger/gener...

South Africa: http://www.jse.co.za/main_board_market.jsp?page=a

I'm afraid you'll have to search around each site individually to find where they have compiled data that is useful. Sometimes, even if you can't screen in anyway, you'll be able to find daily, weekly, monthly recaps / accounts of trading that list some of the big companies, major movers, cheapest stocks by P/E – whatever. In other cases, like Bermuda, you can and should literally read every company's financial report cover to cover.

Unfortunately, it can be very difficult to actually buy some of these stocks. Bermuda barely trades (the domestic issues). That's not a problem in the other countries; there the problem is finding someone to make the trade.

If you have a discount broker this might be hard. A few discount brokers have good enough customer service that they will find a way to get you the shares if you're willing to pay a hefty fee (which won't be prohibitive for an individual investor if you're looking for real value type investments and you don't trade much). Obviously, any full service broker worth their salt will find you shares. In all cases, it's likely a little special work is required on their part - it's totally doable, but generally man is as lazy as he can afford to be, so it's possible you'll get a non-committal response the first time you ask if there's a way to place such a trade - especially at a discount broker with less than stellar customer service.

Generally, whether you're using a discount broker or a full service broker, getting someone on the phone and knowing exactly what you want to buy is the way to get the trade done and done right. There's always a way, you just need to convince your broker to put in a little special effort – with a discount broker you may actually need to say "put your boss on the phone". I know that sounds corny, but if you draw the wrong guy on the other side of the phone, it might be the only way you get things done.

Some people say Schwab is good with this stuff. I don't know – but, that's the only specific mention of a good discount broker for international trades I've heard. If you don't read the blog "Controlled Greed", you might want to start. The author is a value-oriented individual investor who sometimes places trades overseas and he's actually posted a few times on how best to do it.

I hope that helps.

Good luck with your bargain hunting.

that's exactly what I was looking for. thanks Geoff.

wow, very nice answer, thank you. You said you worked your way through the alphabet. How long did it take you to go through 10,000+ companies?

No. No. It doesn't work like that. I think Buffett said about reading the Moody's Manuals (in the 1950s) that he looked at everything – but some of it not very closely. That's the way it works. So, for me, entire industries like pharmaceuticals, semiconductors, etc. are out of bounds unless the balance sheet provides a clear bargain.

You can know some areas fairly well – say, U.S. stocks under $100 million trading for less than 2x book or less than 15x earnings . That is – believe it or not – a pretty big area to cover. Some stocks on that list will jump out as bargains (low P/E, low price-to-book, low price to working capital, etc.); some businesses will jump out because they're attractive and easy to understand.

It's hard to explain. You just open each 10-K / 10-Q (everything's online now so it's real easy) read the balance sheet and the business description and that eliminates some huge percentage (the vast majority) of businesses as being something less than a fat pitch (for you). Even money managers can follow this approach (quickly throwing out the vast majority of stocks as not being either a truly great business or a clear quantitative bargain) and every individual investor certainly should.

So, if you're selective, and you try not to fire "until you see the whites of their eyes" that eliminates most stocks. Basically, if neither Ben Graham nor Phil Fisher would have loved it at first sight it's probably not worth your time, because you only need a small number of great ideas. So, it's literally a few minutes at most spent with probably 90% of the stocks out there – that's certainly true with current valuations which if not rich are certainly approximately "fair" across large parts of the market.

So, 10,000 stocks would become 1,000 stocks in less than a quarter of a year or less. Obviously, that's not how it works. Rather, you would spend 25% (or 20% or whatever) of your time just flipping through stocks so to speak and the rest of your time digging into the 10% or so that might be possible bargains. Then, you might spend another 25% of your time eliminating another 90%+. By the way, this is where most investors start. They don't do the first sweep where you glance at everything – so, they probably never really consider more than say a thousand opportunities in even the most cursory manner.

That still leaves something like half of your time to focus on fewer than 100 good leads. As I would say eliminating 90% of a list is actually a pretty conservative estimate for someone who likes to have a concentrated portfolio, we're really talking about spending half your time looking at much fewer than 100 stocks and choosing the best ones. The time spent per idea will increase substantially as you get closer to actually buying it.

But, again, all this is an abstraction. You don't do it in order – and time doesn't stand still. Rather, you spend part of your time (all the time) sweeping over the market, just window shopping, then you think a bit about the less than 10% of the group you like and you probably spend as much time on each one as the average investor does on the investments they actually buy – I don't know what that is, but probably something 15 minutes at Morningstar looking over the past 10-year results, for bigger stocks reading Value Line, Morningstar, etc. which give quick, good overviews and then of course – for all stocks – there's the reading of the 10-K.

When I say "reading the 10-K" I don't mean browsing it, I mean reading it, but I don't mean reading every word. Probably after you've read a few hundred 10-Ks and certainly after you've read a thousand 10-Ks you don't read them the same way you read other things. You can see the boilerplate and it's kind of like everything that matters jumps out – it's far from "skimming" but it's also far from the way you would read "The Catcher in the Rye". I don't know how to explain it. You probably know what I mean already – I'm sure many of the people on this site do. It's hard to explain, but every has the same experience after they spend enough around filings, financials, etc.

So, that leaves probably half your time (at least) to really think about super cheap stocks and good businesses. Then, it depends on which kind of situation you're looking at. For the kind of stuff Buffett says he'd be able to get 50% annual returns on (I'm assuming this is tiny, super cheap stocks, Graham type bargains, arbitrage, announced events of all kinds – tenders, liquidations, etc.) that stuff is very quick. You do the math, it works out, the very next day you place an order. It's kind of like being asked to "Find Mate in Three". You work it out in your head and it can make you a ton of money – but it actually takes a very short amount of time.

Then, there's the more complex stuff, which is anything that isn't an asset play or "workout" of some kind. There, you're buying an operating business and expect the earnings to help you through. I would put Posco (PKX) in that category. I mention that just because it's a stock I own and mentioned on my blog and everyone here will recognize it as a Berkshire holding so I'm sure we're on the same page in terms of knowing the name. That was a big company (huge actually) and there was some stuff to think though – Korea, Steel, the possibility of a catastrophic Chinese caused steel glut, etc. The probability of those sorts of apocalyptic things seemed low (I can't be more precise than that) while the deep, deep discount of the company to intrinsic value and the qualitative strength of the company (relative to its peers – this is the steel business after all, it's not a great business, but you can make money in it) seemed high. So, you read everything you can about the company, steel, etc. and just kind of let it percolate for a few weeks or whatever and then one day you ask yourself, "How do I feel about Posco?" and the answer isn't just "Great!" – it's "comfortable". So, that's the last step, getting comfortable and I would say that rather passive seeming step actually takes up at least 50% of your time – in my experience, but other people have other approaches. That's just how I do it.

Wow – that's a long answer for a short question. Sorry about that.

Thank you for the very thorough answer. I'm a fairly new investor, i started learning about investing about a year ago. Right now is summer vacation for me, so I'm trying to start analyzing businesses and see how far i get. Your answer helped me figure out where to get started. I think I'm going to go through the US public companies first, before i even touch foreign stocks. Also I'm a reader of your blog. Very nice job.

Oh, do you happen to know of a good free stock screener?

Kenkid,
Zachs.com's custom screener has worked great for me and is the best free one I've found because of all the variables it screens. here it is.
Zach's stock screening

then click on custom screener

I don't know. It really depends on what you want to screen for. I'm sure some of this site's other users are better qualified to answer this, because I rarely screen. However, I find that Morningstar is great, because it allows me to screen for certain fundamentals that other screens don't and you can immediately follow the link from the screen to all the Morningstar data, which I think is the best data and presentation of any site I know of – (excluding Value Line, of course, but a Value Line subscription isn't anywhere near free). Anyway, I think the Morningstar screener I'm referring to is actually for "Premium" members, but membership is quite cheap and worth it. I don't know about free screeners – I thought the MSN Money screener was pretty good. It doesn't seem to work with Firefox though – at least it didn't last I checked.

By the way, Value Line is great. I’m addicted to it like nothing else. But, it isn't cheap. They run lists of the cheapest stocks on the basis of book value, earnings, etc. which uses the adjusted Value Line data rather than online data (which can be misleading at times). Also, you get both a print and online subscription – so once a week there's actually something to hold in your hands. I guess I'm old fashioned that way – I prefer print when I want to linger over something and the years and years of financial data in those Value Line tables are definitely something to linger over.

thanks Geoff that's exactly what i was looking for.

Hey Geoff, I was wondering about your track record with investing. Any success? =D.

Also, thank you Geoff and Mr.Wallstreet for your screener suggestions

Kenkid,
Every Library I've visited as at least one of the Value Line products.

I searched my library, but i couldn't find it. Maybe I'll look again.

You need to go to the info/circulation desk. It will not be on a shelf.

you were right. Thanks Nick! i wouldn't have found it without your help.

My pleasure!